Direct Cash Transfer to beneficiaries of various welfare schemes by Govt.

Objective:

To remove the middlemen from the system

To check leakages from the system

Elimination of falsification and duplication with regard to subsidies

Give power of choice to beneficiaries, especially BPL

No delay in transfer of money to beneficiaries

Beneficiaries can access it themselves or via banking correspondents who are being set up in all the areas

As per Finance Minister, P.Chidambaram, it costs the government Rs 3 to transfer 1 rupee to the pockets of beneficiaries. The rest goes on administrative expenses, waste and corruption. Cash transfers will do away with mediators of all sorts, thus reducing corruption and administrative burdens.

At present, beneficiaries have to furnish various paperwork for availing benefit. CTS has the potential to merge all paperwork, thus reducing red tape and improving efficiency.

Modus operandi of the scheme:

Banks would be the distribution point for cash subsidy initially

Subsidies would directly be electronically transferred to the bank accounts of the beneficiaries

The electronic cash transfers will be based on Aadhaar platform

Stages planned:

By January 1, 2013, 51 districts with high Aadhar penetration will be covered.

By December 2013, the entire nation will be covered

What are the challenges before Govt?

Since, the government is basing the entire exercise on banks and using technology transfer to directly benefit the people using Aadhaar platform. But the issues are:

Most BPL families don’t have bank accounts

Several villages don’t even have bank branches

At present, only about 10% of population has Aadhar cards

Politically difficult to withdraw benefits from once-poor folk who become better off.

Trump Card for Congress?

NAREGA and waiving off farmers’ loans proved trump cards for Congress in the last election, this time the directly giving beneficiaries cash in their very own accounts may prove as Trump Card for Congress before next elections

Union Finance Minister P.Chidambaram called this scheme as a ‘game changer’